System and method for the assessment, pricing, and provisioning of distance-based vehicle insurance

ABSTRACT

A system and method for assessing, pricing, and provisioning distance-based vehicle insurance are provided. In one example, the method receives identification information of a customer and an associated vehicle, and a current odometer reading. Multiple coverage types are provided to the customer, as is at least one quote when the customer selects one of the coverage types. The quote includes a policy rate identifying a cost per distance unit based on the identification information. The customer is provided with multiple items based on the quote, where each item includes a total number of distance units for purchase at the policy rate. An insurance policy may be purchased in response to the customer selecting one of the items. The insurance policy&#39;s coverage is based on an expiration odometer value defined as the sum of the current odometer reading and the total number of distance units included in the selected item.

CROSS REFERENCE TO RELATED APPLICATIONS

This application is a continuation of U.S. patent application Ser. No.10/977,712, filed Oct. 29, 2004, which is hereby incorporated byreference.

BACKGROUND OF THE INVENTION

Conventional methods for pricing and selling vehicle insurance aregenerally based upon time periods (e.g., months or years), also known asterms. An applicant's data, such as age, sex, location of residence, anddriving record are combined with other factors to create an actuarialclass, which is then used to arrive at a price. This price is thenassociated with a unit of exposure. In conventional insurance, the unitof exposure is a period of time (a term). As the insurance contract isthen principally defined based upon the exposure unit, conventionalinsurance contracts are principally defined by the term. However, suchconventional insurance mixes a fixed cost with a variable usage pattern.Among other disadvantages, this approach penalizes low mileagecustomers.

Accordingly, what is needed is an improved system and method foraddressing such issues.

BRIEF DESCRIPTION OF THE DRAWINGS

FIG. 1 is a flowchart of one embodiment of a method for assessing,pricing, and provisioning distance-based vehicle insurance.

FIG. 2 is a diagram of one embodiment of a system within which themethod of FIG. 1 may be implemented.

FIG. 3 is a flow chart of one embodiment of a method for using thesystem of FIG. 2.

FIGS. 4-8 are exemplary screenshots illustrating various displays of thesystem of FIG. 2.

FIG. 9 is a flowchart of one embodiment of a method for calculating andapplying a credit for a referral.

FIG. 10 is a flowchart of one embodiment of a method for determiningwhether an insurance policy is about to expire and notifying thecustomer of the upcoming expiration.

FIG. 11 is an exemplary windshield sticker that may be generated by themethod of FIG. 10.

FIG. 12 is a diagram of one embodiment of a system within which themethod of FIG. 10 may be implemented.

FIG. 13 is a flowchart of one embodiment of a method for calculating apremium for use in processing a claim based on an expired insurancepolicy.

FIG. 14 is a diagram of a portion of one embodiment of a distance-basedinsurance policy.

FIG. 15 is a diagram of a portion of one embodiment of an adjusted terminsurance policy.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

The present disclosure relates to a system and method for theassessment, pricing, and provisioning of distance-based vehicleinsurance. However, it is understood that the following disclosureprovides many different embodiments or examples. Specific examples ofcomponents and arrangements are described below to simplify the presentdisclosure. These are, of course, merely examples and are not intendedto be limiting. In addition, the present disclosure may repeat referencenumerals and/or letters in the various examples. This repetition is forthe purpose of simplicity and clarity and does not in itself dictate arelationship between the various embodiments and/or configurationsdiscussed.

Referring to FIG. 1, in one embodiment, a computer implemented method100 may be used for providing distance-based insurance to a user (e.g.,a customer). As will be described later in greater detail, thedistance-based insurance enables variable use to be paired with variablepricing, in contrast to conventional term insurance, where a fixed costis paired with variable usage. Accordingly, the method 100 enablesdistance-based insurance to be purchased and used like a utility,allowing costs to accurately reflect usage, eliminating inefficientpricing, and creating consumer choice.

Distance-based insurance may also improve the insurer's risk managementby aligning consumer pricing with the best predictor of future insuranceclaims—vehicle mileage. Extensive research on the relationship betweenannual mileage and insurance claims suggest that if other risk factors(such as driver age, location, and vehicle use) are constant, thenaccident risk tends to increase in a roughly linear relationship withmileage. Distance-based insurance may encourage beneficial risk-poolselection by being most advantageous to low-mileage (and hence, lowerrisk) drivers.

The method 100 begins by receiving customer and vehicle identificationinformation in step 102. The customer identification information mayinclude such information as driver's license number, age, gender, andaddress. The vehicle identification information may include suchinformation as license plate number, vehicle identification number(VIN), and vehicle make, model, and year. In step 104, a currentodometer reading of the vehicle is received. It is understood that theodometer units (e.g., miles or kilometers) may differ depending on suchfactors as the location of the vehicle or its origin. Furthermore, it isunderstood that no odometer audit or verification is performed by theinsurance provider during the method 100. The odometer reading enteredby the customer is used as the current odometer reading.

In step 106, multiple coverage types are provided to the customer.Exemplary coverage types may include recommended, economy, and minimalcoverage. It is understood that some aspects of the coverage types maybe controlled by applicable state regulations. In step 108, uponreceiving an input selecting one of the coverage types, the customer isprovided with at least one quote. The quote includes a policy rateidentifying a cost per distance unit (e.g., $0.05/mile) based on thecustomer and vehicle identification information. Accordingly, the costper mile includes various factors based on a risk assessment.

In step 110, the customer is provided with multiple pre-calculated itemsbased on the quote. Each of the pre-calculated items includes a totalnumber of distance units for purchase at the policy rate. For example,one item may provide 5000 miles of coverage for $250 (i.e., $0.05*5000),while another item may provide 6000 miles of coverage for $300 (i.e.,$0.05*6000). It is understood that various alterations may be made inthe calculations to provide, for example, an incentive for a customer topurchase additional miles. For example, the policy rate may be reducedto $0.049 upon the purchase of 10,000 miles. In step 112, a purchasetransaction for an insurance policy may be performed in response toinput from the customer selecting one of the items for purchase. Theinsurance policy includes an expiration odometer value defined as thesum of the current odometer reading and the total number of distanceunits included in the selected item. Accordingly, the method 100 enablesa distance-based vehicle insurance policy to be purchased without aphysical inspection of the odometer reading by the insurer prior topurchase, and without the use of odometer audits or verifications, orany type of tracking device placed in the vehicle.

Referring to FIG. 2, a system 200 illustrates one embodiment of a systemthat may be used to provide distance-based vehicle insurance. Forexample, the method 100 of FIG. 1 may be implemented within the system200. In the present example, the system 200 includes a kiosk 202 atwhich a user (not shown) may price, select, and purchase distance-basedinsurance. It is understood that other systems (e.g., a website) mayprovide similar functionality.

The kiosk 202 includes a number of components to provide information tothe user and to receive and process input from the user. For example,the kiosk 202 may include a central processing unit (CPU) 204 coupled toa memory unit 206, an input/output (“I/O”) device 208, a networkinterface 210, a printer 212, and a magnetic stripe reader (MSR) 214.The network interface may be, for example, a modem (e.g., a V.90 modem)and/or one or more network interface cards (NICs) that are eachassociated with a media access control (MAC) address. The networkinterface 210 may be compatible with any of a variety of wireline andwireless network technologies, such as TCP/IP and/or Bluetooth. Thecomponents 202, 204, 206, 208, 210, and 212 are interconnected by a bussystem 216, which may include wireless and/or wired communication paths.

The components may be located in a single storage unit in the kiosk 202or may be configured in many different ways. For example, the CPU 204,memory unit 206, PO device 208, and network interface 210 may be locatedwithin the kiosk 202 as part of a single computer, and the printer 212and MSR 214 may be attached as peripherals. In addition, it isunderstood that each of the listed components may actually representseveral different components. For example, the CPU 204 may represent amulti-processor or a distributed processing system; the memory unit 206may include different levels of cache memory, main memory, hard disks,and remote storage locations; and the I/O device 208 may includemonitors, keyboards, touch screen displays, and the like. The printer212 may be one or more printers and may utilize thermal printing orother suitable printing technologies. For example, the printer 212 mayrepresent a thermal printer for vinyl stock and another thermal printerfor coated paper stock.

The network interface 210 may be connected to a network 218. The network218 may be, for example, a subnet of a local area network, a companywide intranet, and/or the Internet. Because the network interface 210may be connected to the network 218, certain components may, at times,be shared with other computers (not shown). Therefore, a wide range offlexibility is anticipated in the configuration of the kiosk and itscomponents. Furthermore, it is understood that, in some implementations,CPU 204 may act as a server to other computers.

Coupled to the kiosk 202 via the network 218 is a server 220. The server220 may be one of a plurality of servers and may be selected forhandling a particular user's request by a network device such as arouter (not shown). The router may handle all communication requests bydelegating them in round-robin fashion (or using another allocation/loadbalancing process) amongst the servers. The server 220 is coupled to orincludes an actuarial engine 222, which utilizes information stored in adatabase 224. The actuarial engine 222 and database 224 may be used todetermine an actuarial class for the customer as well as an associatedprice per mile, as will be described later. The server, which includes aprocessor and memory (not shown) may execute software instructionsneeded to access the actuarial engine 222 and database 224, as well asto communicate with the CPU 204. In some embodiments, the server 220 mayhost all or part of a website comprising various web pages and/orexecutable code for providing similar functionality to that of thepresent example.

The CPU 204 includes a plurality of software instructions for anoperating system that handles peripheral device communication, networkcommunication, and hosts a local point-of-sale (POS) application forcustomer use. The CPU 204 and its associated components may communicateall customer information and selections over the network 218 to theserver 220, or the CPU 204 may perform some or all processing functionsitself.

In operation, a customer interacts with the kiosk 202 via the touchscreen display 208, which allows the customer to both read and enterdata (the latter by use of an onscreen keyboard). When queried by thePOS application for driver's license information, the customer swipeshis driver's license in the MSR 214 (assuming the driver's licenseincludes a magnetic stripe containing such information). When queried bythe POS application for credit card information, the customer swipes hiscredit card in the MSR 214. If the customer agrees to a policy, theprinter 212 prints a vinyl static-cling reminder sticker for thepolicyholder's windshield. Additionally, the printer 212 prints twoproof-of-insurance cards on coated paper for the customer.

In some embodiments, the kiosk may include wireless (e.g., Bluetooth)capability to enable interaction with the customer's cellular telephone.For example, during a payment step in the purchasing process, thecustomer may elect to purchase the insurance via the cell phone. Cellphones have unique identifier numbers (e.g., an international mobilesubscriber identify (IMSI) number) that allows for their cellularnetwork identification. This number may also be used for uniqueidentification for payment transactions. A customer may, for example,purchase insurance and have it added to their cell phone bill.

The use of a cell phone also enables a customer to transmit electroniccoupon offers to the kiosk. These coupon offers could be part of alarger marketing campaign wherein the customer receives insurancecoupons/credits at participating businesses.

The use of a cell phone may also enable the customer to convenientlytransmit the phone number of a referrer (e.g., another customer who hasreferred the current customer for the current purchase). The phonenumber may then be used as a unique identifier (UID) for a referralcredit. For example, the customer may scroll through their cell phone'saddress book looking for the name of the person who referred them to thekiosk 202. Next to each address entry may be a keypad option to selectthe phone registry entry as “Referred me for insurance.” If the userpresses the cell phone keypad item, the relevant phone number for thedisplayed address entry is transmitted to the kiosk 202. The kiosk 202may be configured to acknowledge the receipt of the referrer number overthe network.

Referring now to FIG. 3 and with additional reference to FIGS. 4-8, amethod 300 illustrates a more detailed example of how a customer maypurchase a distance-based vehicle insurance policy using an interactivesystem such as the system 200 of FIG. 2. In the present example, thecustomer is a new customer who was referred by an existingpolicyholder/customer.

In step 302 and with additional reference to screenshot 400 of FIG. 4,the customer approaches the kiosk 202 and enters his or her driver'slicense by swiping it through the MSR 214 or entering the number via thetouch screen 208. The system 200 may use the driver's license number toretrieve the customer's name, age, address, driving record, registeredvehicles, and similar information. It may also be used for a limitedcriminal history check. If the consumer is a returning customer, all ofthe previous policy information may be loaded based upon the licensenumber and a confirmation key, and the consumer may then modify anyexisting information and selections. In step 304, the customer entersthe license plate number of the vehicle he wants to insure. The licenseplate number may be used to retrieve the vehicle identification number(VIN), vehicle make, vehicle model, vehicle color, and vehicle age. Itmay also be used to determine if differences exist between the driver'slicense information and vehicle registration information. The VIN may beused to check the vehicle history.

In step 306, the customer enters the current odometer reading of thevehicle, which provides the starting point for vehicle coverage (if apolicy is purchased). In step 310, if there are secondary drivers (asdetermined in step 308), the customer enters the drivers' licensenumbers of the secondary drivers. As with the customer's driver'slicense number, this information may be used to retrieve the secondarydrivers' names, ages, addresses, driving records, and registeredvehicles, as well as for a limited criminal history check. In thepresent example, secondary drivers listed with a registered addressdifferent than the primary driver's (e.g., the customer) are notpermitted.

In step 312 and with additional reference to screenshot 500 of FIG. 5,the customer chooses from three coverage lines (e.g., “Recommended,”“Economy,” and “Minimum”) using a radio-button set. In the presentexample, the three coverage choices improve transaction speed and makethe process more intuitive for the consumer, as well as simplifying themanagement of risk-pools. It is understood that more or fewer coveragechoices may be used, and that each coverage choice may be more or lesscomplicated. In step 314, the customer may also select from additionalcoverage options (e.g., “Collision,” “Comprehensive,” and “RoadsideAssistance”) using checkboxes as illustrated in FIG. 5. These arecoverages that are not legally required, although some lienholders mayrequire them to secure the vehicle collateral. For both the coveragelines and the coverage options, the cost per mile is illustrated to thecustomer. The cost-per mile is based on the entered customer and vehicleinformation and an actuarial rate class with which the customer ismatched by computer (e.g., the server 220 of FIG. 2). The actuarial rateclass is based solely on age, sex, location (e.g., residence address ordriving region), and vehicle type in the present example, but it isunderstood that other factors may be used.

In step 316 and with additional reference to screenshot 600 of FIG. 6,the customer is presented with an insurance quote in the form <currencyunit>/<distance unit>. I2 the present example, the quote is for$0.056/mile, which is the summation of the customer selected“Recommended” coverage line, and the additional coverage options“Collision” and “Comprehensive” (as priced in FIG. 5). The customerchooses the amount of insurance coverage by selecting from a list ofpre-calculated items. For instance, the pre-calculated item in FIG. 6offers $5000 miles of insurance for $280 (at $0.056/mile). Additionalmenu items (not shown, but selectable using the up/down arrows in FIG.6) may be provided for predefined increments up to a maximum availablenumber of miles (e.g., 1000 mile increments up to 25000 miles). Thisapproach allows consumers to see the cost savings relative to theirterm-based insurance plans. It also allows them to see a direct impactfor reduced mileage in the future. The pre-calculation is also veryconvenient and intuitive as a user interface.

In step 318 and with additional reference to screenshot 700 of FIG. 7,the customer is presented with a electronic payment screen and may swipehis credit card in the MSR 214 or enter the credit card information viathe touch screen 208. This approach provides not only paymentinformation, but also provides a last validation check for corroborationof the address/name information from the driver's license with thecredit card issuer's records. Assuming a successful validation,immediate payment may be received from the customer without having toincur the clearance/handling costs of cash or personal checks.

In step 320, a determination is made as to whether the customer wasreferred by an existing customer. If so, in step 322, the customerenters a referral UID of the referring customer. The referral UID isused to calculate the credit to the referrer, as will be described laterin greater detail.

In step 324 and with additional reference to FIG. 8, the customercompletes the financial transaction. Using the printer 212, twoproof-of-insurance receipts are printed on paper cardstock. Theproof-of-insurance cards may also have a confirmation key which can beused to speed future transactions by loading existing policy data.Another printer may be used to print a static-cling windshield remindersticker (FIG. 11) on vinyl stock simultaneously with the printing of theproof-of-insurance cards, or the first printer may print the remindersticker after printing the proof-of-insurance cards. The customer maythen collect the printed items and end the session with the kiosk 202.

Referring now to FIG. 9, in another embodiment, a method 900 may be usedto calculate a credit (e.g., additional miles) for an existing customer(a referrer) who refers a new customer and credit the referrer's accountwith the calculated amount. In steps 902 and 904, a customer's policypurchase request and payment information are received as describedpreviously in greater detail with respect to FIG. 3. In step 906, theUID of the referrer is received and, in step 908, the new customer'spayment is processed. In step 910, the referrer's UID is used to linkthe referrer's account with the new customer's account.

In step 912, the credit that is to be added to the referrer's account iscalculated. In the present example, the credit is a distance-denominatedcredit that provides additional miles of insurance coverage on thereferrer's existing policy. The credit may be calculated using a formulasuch as: Number of Miles Credited to Referrer's Policy=((APercentage)*(Dollar value of new customer purchase))/(Referrer's premiumper mile). For example, with a percentage of 0.02, a dollar value of$280 for the new customer's purchase, and a premium per mile of $0.05for the referrer, the credit to the referrer's account will be 112miles. In the present embodiment, the credited amount is not redeemablefor cash and only new, first-time customer purchases will qualifytowards a referral credit. An existing customer, by referring multiplenew customers for first-time purchases, may receive multiple, cumulativecredits. In step 914, the referrer's account is credited with thecalculated amount of miles. In some embodiments, the credit may be“reserved” for a previous customer that no longer has a current policy.If the referrer once again obtains a current policy, the credit may beapplied to the account. This may be used, for example, to both encouragereferrals and to encourage a previous customer to purchase anotherpolicy.

Referring now to FIG. 10, a method 1000 illustrates one embodiment of aprocess for generating policy expiration/renewal reminders. The method1000 includes the use of collected odometer readings, pricingmultipliers, interactive reminders, and static-cling windshieldstickers. It is understood that not all of these approaches may be usedand that others may be added.

The purchase of distance-based insurance creates a contract that islimited to a quantity of distance (e.g., “from the odometer reading 5000miles up to and including the odometer reading 7500 miles”).Accordingly, it may be desirable to remind policyholders of approachingpolicy lapses to prevent them from accidentally driving beyond theirpolicy coverage. Additionally, many consumers purchase a vehicle withthe assistance of a lien, and the lienholder often requires insurancecoverage of the vehicle to protect the collateral for the lien.

In step 1002 and with additional reference to FIG. 11, a static-clingwindshield sticker 1100 may be generated when a customer purchases adistance-based insurance policy (as in step 324 of FIG. 3). Asillustrated in FIG. 11, the sticker may include such information as thebeginning and ending odometer readings of the insured vehicle, as wellas a phone number at which information regarding renewal may beobtained.

In addition to the window sticker, the customer may be sent remindersbased upon, for example, estimated distance traveled as follows. In step1004, a baseline is established by the customer's starting odometerreading at the time of purchase. In step 1006, the policy end date isestimated using the customer's average vehicle distance traveled (e.g.,miles) for a given unit of time. For example, if a policy is for 12000miles and the average driver travels 1000 miles per month, the estimatedpolicy lapse date is twelve months from the date the policy waspurchased. The estimated rate may also be calculated using the ownershiprecords. For example, if the vehicle was purchased by the policyholdertwo years ago with an odometer reading of 30000 miles and the currentodometer reading is 78000 miles, then the policyholder travelsapproximately 2000 miles per month. In the absence of a more accuraterate, a default rate may be applied.

In step 1008, the estimated lapse date is updated with any harvestedodometer readings, which may come from such sources as vehicle emissionstests, vehicle maintenance, vehicle sales, vehicle purchases, vehicleregistrations, and vehicle accident reports. Any odometer readings thatare harvested enable a more accurate travel rate to be estimated for theparticular customer.

In step 1012, if the policy end date is near (as determined in step1010), the customer is sent a reminder (e.g., a letter or an electronicreminder such as an email or text message) of impending lapse of thepolicy (e.g., as defined either by time or by mileage). This reminderdirects the customer to use a communications device (e.g., a cell phone,pager, or personal digital assistant) or to go to a website, kiosk, orother interactive destination in order to enter their current odometerreading. The entered odometer reading may be used in step 1014 tofurther refine the predictive process for the rate of vehicle travel andthe associated lapse date. Over a period of time, the method 1000provides a more personalized rate of travel for each policyholder. Withfewer odometer readings, the notice may be sent with a greater marginfor error (e.g., more time until the policy lapse). With more odometerreadings and the corresponding fidelity, the notice may be sent with asmaller margin of error (e.g., less time until the policy lapse).

Referring to FIG. 12, a system 1200 illustrates one embodiment of asystem implementation for sending electronic reminders to a customer viaa cell phone. Various databases and record readings from governmentsources 1202 (e.g., state records and national government sources),private business records 1204, and the owners' reported odometerreadings 1206 are amalgamated into a central data repository 1208 usingvehicle identification numbers (VINs) as the primary keys. Additionally,each recorded odometer reading is associated with a date. A database1210 of policyholders, including their associated vehicles, is linked tothe database 1208 of odometer readings.

A server software process 1212 (e.g., software instructions representinga process for estimating mileage to predict policy lapses) operating ona server 1214 analyzes all odometer readings associated with apolicyholder's vehicle. When the process 1212 identifies an approachingpolicy expiration, it spawns a remote server process 1216 to communicatewith a policyholder. In the present example, the remote server process1216 sends a message to the policyholder's cell phone 1220 over astandard cellular network 1218.

The policyholder's cell phone 1220 receives the message, which isinterpreted by a local software process 1222 (that may have beenpreviously installed by the policyholder). The cell phone then presentsa screen querying the policyholder and requesting that the policyholderenter his vehicle's current odometer reading using the phone keypad.When the policyholder enters the odometer reading, the local softwareprocess 1222 either recommends an immediate insurance renewal orrecommends waiting.

If the local software process 1222 recommends a renewal, the localsoftware process opens a screen to purchase additional miles ofinsurance coverage. The policyholder selects the quantity and the methodof purchase (e.g., via a credit card on file, or via cell phone bill).If the local software process 1222 recommends waiting, the localsoftware process sends the odometer reading to the remote softwareprocess 1216, which then passes the information on in order to updatethe databases. In some embodiments, the local software process 1222 maynot query the policyholder if the recommendation is to wait.Furthermore, in some embodiments, the local software process 1222 maysimply repeat a recommendation made by the remote software process 1216.

It is understood that the system 1220 may be coupled to or part of othersystems, such as the system 200 of FIG. 2. For example, the server 1214may be the server 220 of FIG. 2, or may be in communication with theserver 220.

Referring now to FIG. 13, in another embodiment, a method 1300 mayenable a policyholder to renew an expired policy by retroactivelypricing the coverage exposure from the point of policy lapse to thepoint of a vehicle claim. Generally, there are three parties concernedwith possible coverage lapses: state regulators, policyholders, andlienholders. Regulators need policyholders to maintain coverage to meetlegal requirements. Lienholders need coverage to maintain protection oftheir collateral (the vehicle). Policyholders need to maintain coverageto comply with the law, possible lienholders, and to minimize potentialfinancial losses.

One problem of distance-based insurance is that policyholders can drivebeyond the odometer limit of their vehicle's coverage, causing theirpolicy to expire. The method 1300 may be used to address the likelyusage patterns of policyholders (as lapses will happen) and balance theuninterrupted coverage needs of regulators, lienholders, andpolicyholders without burdening the insurance product itself withfinancial or operational baggage.

In step 1302, an insurance claim is received from a policyholder. Instep 1304, a determination is made as to whether the policy againstwhich the claim is being made has lapsed. For example, an odometerreading included in the claim may be compared to an expiration odometervalue of the policy. If the policy has not lapsed, the method continuesto step 1312, where the claim is processed.

If the policy has lapsed, the method continues to step 1306, where apremium is calculated. While the policyholder is explicitly covered forany claims/involvements that occur beyond the stated odometer limit oftheir policy, the policyholder will be charged a financial premium ifthe associated insurance policy is beyond the stated odometer limit.Among other benefits, this premium encourages the policyholder to keeptheir policy current by aligning their financial interests with theirrisk interests.

The premium may be calculated as: Premium=((Current odometerreading)−(Odometer limit for policy expiration))*((Policyrate)*(Multiplier)). “Premium” is the price the policyholder will becharged for the period of vehicle use between the expiration of theirpolicy and the odometer reading at the time of the involvement/claim.“Current odometer reading” is the current reading of the vehicle'sodometer. “Odometer limit for policy expiration” is the upper limit forthe policy coverage (e.g., if the policyholder purchased 5,000 miles ofcoverage with a starting odometer reading of 90,000 miles, then thepolicy expires at 95,000 miles). “Policy rate” is the regular cost ofcoverage to the policyholder for the given vehicle and coverageselections (e.g., $0.05/mile). “Multiplier” is a number that indicateshow much the premium will be over the normal rate.

Accordingly, if a claim is made on a lapsed policy, the premium will becharged for the usage during the lapse. For instance, if apolicyholder's policy ends at 95,000 miles and the policyholder has aninvolvement at 100,000 miles, the policyholder may still elect to make aclaim. If a claim is made, he must pay for the implicit insuranceconsumed from 95,000 miles to 100,000 miles, a total of 5,000 miles.These 5,000 miles of coverage will cost him a multiple of his usualrate. For instance, if his usual rate is $0.05/mile, he must pay$0.25/mile (with a multiplier of five). Therefore, he must pay $1,250(instead of the $250 cost at the usual rate).

In step 1308, a determination is made as to whether the policyholderwants to renew the policy. The premium may be displayed to thepolicyholder at this time or, in other embodiments, the policyholder maysimply be given the choice of renewal and notified that a premium willbe charged per a defined policy that is provided to the policyholder. Ifthe policyholder does not want to renew the policy, the method 1300ends. If the policyholder does want to renew the policy, payment fromthe policyholder may be accepted in step 1310 and the claim may beprocessed in step 1312. Accordingly, the method 1300 may provide“retroactive coverage” for distance-based insurance to be maintained atall times. Furthermore, the premium may encourage policyholders to keeptheir policies current through renewal, extension, or larger initialpurchases.

Referring to FIGS. 14 and 15, in other embodiments, it is understoodthat variations of a distance-based insurance policy may be used. Forexample, three possible distance-based policy contract types include apure distance-based policy, a hybrid policy, and an adjusted termpolicy. The pure distance-based policy (a portion of which is shown inFIG. 14) bases the policy beginning and ending solely on odometerreadings. The policy is only valid while the vehicle's odometer readingis within the stated value range. The hybrid policy type combinesterm-based comprehensive coverage with distance-basedliability/collision coverage. The comprehensive portion is delimited bytwo dates to create a term policy. The liability/collision portion isdelimited by two odometer readings to create a distance policy. Theadjusted term policy type (a portion of which is shown in FIG. 15)provides for a term with annual credits/debits for actual usage (e.g.,based on mileage). The credit/debit is based upon the harvested odometerreadings. If the customer is under the stated mileage at the end of theterm, he will receive a credit for the unused miles at the policy rate.If the customer is over the mileage, he will pay a debit for the overageat the policy rate.

It is understood that, while the above embodiments do not rely onodometer audits or verification, various steps may be implemented toprotect against fraud using, for example, candidate screening at thetime of purchase, odometer record audits at the time of a claim, and/ornational claim screening at the time of a claim. Some or all of theseapproaches may be implemented in the examples described above, includingthe system 200.

Using candidate screening at the time of purchase (e.g., driver'slicense number, license plate number, and credit card), an insurancecompany may gather many pieces of corroborating information regarding anapplicant for a policy. By cross-checking information with vehicleregistration and ownership records, criminal records, registeredaddresses, claims databases, etc., discrepancies or other “flags” may beidentified that may prevent a policy from issuing to a customer. In someembodiments, such a flag may result in a request for the potentialcustomer to contact the insurance company, or may result in anotification to the insurance company that customer support shouldcontact the potential customer.

Using odometer record audits at the time of a claim may include checkswith public and private databases (vehicle registration, emissioninspections, oil services, owner statements, etc.). For example, if theinvolved vehicle has been in an accident, the reporting police officerwill provide an odometer reading; if the involved vehicle is sent to arepair shop, the latter will provide an odometer reading. A suspectodometer history may result in a claim being denied or investigated.

National claim screening at the time of a claim may be used in place ofor in addition to candidate/claim screening at the point-of-sale. Forexample, an insurance company may screen all claim requests againstfraud discovery and prevention database services from companiesproviding such information.

While the preceding description shows and describes one or moreembodiments, it will be understood by those skilled in the art thatvarious changes in form and detail may be made therein without departingfrom the spirit and scope of the present disclosure. For example,various steps of the described methods may be executed in a differentorder or executed sequentially, combined, further divided, replaced withalternate steps, or removed entirely. In addition, various functionsillustrated in the methods or described elsewhere in the disclosure maybe combined to provide additional and/or alternate functions. Asdescribed, some or all of the steps of each method may be implemented inthe form of computer executable software instructions. Furthermore, theinstructions may be located on a server that is accessible to manydifferent clients, may be located on a single computer that is availableto a user, or may be located at different locations. Therefore, theclaims should be interpreted in a broad manner, consistent with thepresent disclosure.

Thus, the present invention is well adapted to carry out the objectivesand attain the ends and advantages mentioned above as well as thoseinherent therein. While presently preferred embodiments have beendescribed for purposes of this disclosure, numerous changes andmodifications will be apparent to those of ordinary skill in the art.Such changes and modifications are encompassed within the spirit of thisinvention as defined by the claims.

1. A method for assessing, pricing, and provisioning distance-basedvehicle insurance, the method comprising: receiving identificationinformation of a customer and an associated vehicle; receiving a currentodometer reading of the vehicle; providing a plurality of coverage typesto the customer; providing the customer with at least one quote uponreceiving a selection from the customer of one of the coverage types,wherein the quote includes a policy rate identifying a cost per distanceunit based on the customer and vehicle identification information;providing the customer with a plurality of pre-calculated items based onthe quote, wherein each item includes a total number of distance unitsfor purchase at the policy rate; and performing a purchase transactionfor an insurance policy in response to the customer selecting one of theitems for purchase, wherein coverage provided by the insurance policy isbased on an expiration odometer value defined as the sum of the currentodometer reading and the total number of distance units included in theselected item, and wherein the current odometer reading is not auditedprior to or during the purchase transaction.
 2. The method of claim 1,wherein the step of receiving a current odometer reading of the vehiclefurther comprises receiving an odometer reading of the vehicle from thecustomer.
 3. The method of claim 1, further comprising: receiving anupdated odometer reading of the vehicle; calculating whether the updatedodometer reading is within a predefined number of distance units fromthe expiration odometer value; and notifying the customer if the updatedodometer reading is within the predefined number of distance units. 4.The method of claim 3 wherein notifying the customer includes offeringthe customer a renewal option to purchase additional insurance.
 5. Themethod of claim 3 wherein the updated odometer reading is received fromat least one of emission testing of the vehicle, maintenance of thevehicle, sale of the vehicle, purchase of the vehicle, registration ofthe vehicle, and an accident record of the vehicle.
 6. The method ofclaim 1, further comprising: receiving an insurance claim from thecustomer; determining if the purchased insurance has expired; andcalculating a premium insurance amount if the purchased insurance hasexpired, wherein the premium insurance amount must be paid by thecustomer before the insurance claim is paid.
 7. The method of claim 6,wherein the premium insurance amount is calculated based on thevehicle's odometer reading at the time of the insurance claim, theexpiration odometer reading, the policy rate, and an adjustment value.8. The method of claim 1, further comprising: receiving anidentification of a referring customer from the customer; calculating adistance-based credit for the referring customer based on the insurancepolicy; and crediting an insurance account associated with the referringcustomer.
 9. The method of claim 8, wherein crediting the referringcustomer's insurance account includes adding additional miles to theaccount.
 10. The method of claim 9, wherein the additional miles areequal to ((a percentage)*(a dollar value of the insurance policypurchased by the customer))/(the referring customer's policy rate). 11.The method of claim 1, wherein the coverage provided by the insurancepolicy is also based on a predefined period of time.
 12. The method ofclaim 11, further comprising: determining whether a current odometerreading at the end of the predefined period of time is greater or lesserthan the expiration odometer value; and charging the customer for thedifference between the current odometer reading and the expirationodometer value if the current odometer reading is greater, or creditingthe customer for the difference between the current odometer reading andthe expiration odometer value if the expiration odometer value isgreater.
 13. A method of providing automobile insurance, the methodcomprising: receiving customer information from a customer; receivingautomobile information from the customer, the automobile informationincluding a first odometer reading of an automobile; determining a ratebased upon the customer information and the automobile information;offering at least one insurance policy option, the at least one optionincluding an offer to insure the automobile at a cost per unit distanceof coverage; receiving a customer selection of a number of units ofdistance of coverage; receiving a payment for the number of units ofdistance of coverage, the payment based on the cost per unit distance;and insuring the customer and automobile while a current odometerreading of the automobile is less than the sum of the first odometerreading and the customer selection of a number of units distance ofcoverage; wherein an odometer audit is not performed prior to initiatingcoverage for the automobile and customer.
 14. The method of claim 13,wherein the step of offering at least one insurance policy optionfurther comprises offering a plurality of coverage limits.
 15. Themethod of claim 13, further comprising obtaining an odometer auditbefore paying an insurance claim resulting from insuring the customerand automobile.
 16. The method of claim 13, wherein no odometer trackingdevice is placed on the vehicle.
 17. A method of providing automobileinsurance, the method comprising: receiving customer information from acustomer; receiving automobile information from the customer, theautomobile information including a first odometer reading of anautomobile; determining a comprehensive insurance rate based upon thecustomer information and the automobile information; determining acollision and liability insurance rate based upon the customerinformation and the automobile information; offering at least oneinsurance policy option, the at least one option including an offer toinsure the customer and automobile at a rate per unit of time forcomprehensive insurance and a cost per unit distance for liability andcollision insurance; providing comprehensive insurance to the customerand automobile while a customer selected unit of time has not lapsed;and providing collision and liability insurance to the customer andautomobile while a current odometer reading of the automobile is lessthan the sum of the first odometer reading and a customer selected of anumber of units distance of coverage; wherein an odometer audit is notperformed prior to initiating coverage for the automobile and customer.18. The method of claim 13, wherein the step of offering at least oneinsurance policy option further comprises offering a plurality ofcoverage limits for the liability and collision insurance.
 19. Themethod of claim 17, further comprising obtaining an odometer auditbefore paying a claim.
 20. The method of claim 17, wherein theautomobile is not provided with an odometer monitoring device.